The following graph shows the market for laptops in 2008: QUANTITY (Laptops) Fil

Question

The following graph shows the market for laptops in 2008: QUANTITY (Laptops) Fill in the blanks with the correct choices: Between 2008 and 2009, the equilibrium price of laptops remained constant, but the equilibrium quantity of laptops increased. From this, you can conclude that between 2008 and 2009, the supply of laptops_1and the demand for laptops2 Suppose instead that between 2008 and 2009, the equilibrium quantity of laptops remained constant, but the equilibrium price increased. From this, you can conclude that between 2008 and 2009, the supply of laptops 3-and the demand for laptops . A. increased B. decreased C. was unchanged 14

Explanation / Answer

1)

In the market the situation of Equilibrium quantity to increases but price remains constant is only possible if demand and supply both increased by equal amount (Supply shift to the right and demand also shift to the right). Hence

In Situation 1 where Equilibrium quantity of laptops increases but Price Remains constant - The Supply of laptops (1) increased and demand for laptops also (2) increased.

2)

In the market the situation of Equilibrium Price to increases but quantity remains constant is only possible if demand increases and supply decreases. Note that amount by which demand increases must equals the amount of which Supply decreases (Supply shift to the left and demand shift to the right). Hence

In Situation 2 where Equilibrium quantity of laptops remains constant but Price increases - The Supply of laptops (3) Decreased and demand for laptops (4) increased.

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